Consumers will have to bear shift in workers levy, builders warn

Foo claimed that the sudden change of policy pertaining to foreign worker levies could cost the sector up to RM2 billion annually. — Picture by Choo Choy May
Foo claimed that the sudden change of policy pertaining to foreign worker levies could cost the sector up to RM2 billion annually. — Picture by Choo Choy May

KUALA LUMPUR, Jan 9 — Putrajaya's move to make employers pay for foreign worker levies could cause a spike in construction costs that will eventually be passed on to consumers, the Malaysian Builders Association of Malaysia (MBAM) said today.

Urging the government to reconsider the decision, MBAM president Foo Chek Lee said construction firms would have little choice but to shift the burden to buyers in order to cushion the impact of the policy.

"With the implementation of this policy, this will have added cost increase by other supporting industries which may result in overall cost increase for the construction industry," Foo told a press conference held at the group's office in Taman Desa here.

"Such a huge sum of money will further impair the cash flow of the employers and make our construction (sector) more expensive and less competitive. Ultimately, these additional costs will be passed down to the rakyat," he added.

Foo also claimed that the sudden change of policy pertaining to foreign worker levies could cost the sector up to RM2 billion annually.

Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi announced the new policy on New Year's Eve despite strong protests from industries heavily dependent on cheap foreign workers.

Earlier this year, Putrajaya also announced new rates on foreign worker levies for employers in the peninsula that took effect on March 18, increasing the levy by RM600 to RM1,850 for each foreign worker hired in the manufacturing, construction and services sectors.

MBAM claimed today the new policy was drafted without any prior consultation with stakeholders.

Fook said forcing employers to pay levies could also decimate smaller industry players and spark chaos as businesses are forced to recalibrate existing contracts.

“The present legal foreign workers have been contracted to pay the levy as condition to work in our country. Changing the policy midway will benefit the foreign workers but it will severely impact the morale and cause dissatisfaction of local workers,” he said.

Fook did not explain further how the new levy policy could affect local workers.

The new ruling under the Employers Mandatory Commitment programme was initially intended to be implemented in February last year.

The government was forced to stall the idea following strong protests from industry players.

MBAM had previously argued that the EMC rule would free foreign workers of their levy debt and embolden them to abscond.

“Implementation of the EMC will not discourage foreign workers on job hopping but instead would discourage them to abscond and move more freely as there is nothing that employers can hold them with when at present they need to clear their levy debt,” Fook said.

There is no data, however, to suggest the regularity of foreign hires absconding.

In calling for the rescinding of the new levy and EMC, MBAM said it wants Putrajaya to delay its implementation until all stakeholders are consulted.

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